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JCPenney: 'Penney' Wise or Pound Foolish?

Shares of JC Penney rose over 3 percent on Monday, after a boutique research firm put out a note suggesting the May sales could come in stronger than expected.

But according to the charts, buying the stock could be penny-wise and pound-foolish.

Auerbach Grayson Global Technical Analyst Richard Ross sees JC Penney as a classically troubled chart that can’t get out of its own way. Even though the stock has risen 35 percent since making a low of $13.55 on April 10th, Ross says that the stock will continue to suffer under the weight of a downtrend that started in February of 2012.

“The stock has some momentum,” Ross said, “but overhead resistance looms large, and I would be a seller into strength.”

And it’s not just the downtrend that points to more bad news ahead. Ross is also troubled by the stock’s 200-day moving average. “The stock has been below the 200-day moving average for over a year,” Ross said. Indeed, while JC Penney shares have managed to touch $19, the 200-day moving average is up above the $20 level, meaning that bearish momentum continues to rule the day.

For this technician, the bottom line is clear. “The trend is your friend,” Ross said. “Sell JC Penney.”

About Talking Numbers

TALKING NUMBERS is a fully integrated media experience, hosted by CNBC and Yahoo Finance, that takes a 360° approach to trading-highlighting the best investment opportunities by analyzing stocks both a technical and a fundamental point of view. But TALKING NUMBERS will do more than just tell investors what to buy; it will show them HOW to buy. Our goal: teach viewers how to harness both technical and fundamental data points so they can become better investors.